Advice Tech predictions for 2022
Peter Worn, Joint-Managing Director at Finura Group
It’s a new year, and the Finura team enjoys thinking about what the next 12 months ahead will hold for advice technology. We resist the urge to comment on industry issues outside our wheelhouse and instead focus on the intersection between broad technology trends, local tech players, adviser & licensee needs and how the significant wealth players are thinking for the future.
First, a look back at what we predicted for 2021.
RegTech start-ups will perish or pivot (PARTIALLY)
We saw little evidence of RegTech’s doing either of these. However, we suspect our prediction is still yet to play out. Shrinking adviser numbers, capital-constrained licensees, and further reg change in the winds mean that the business model of established RegTech players is under pressure. There is a difference between a product and a business. Look to see some of these offerings acquired or merged in 2022.
Vanguards digital advice offering will lead the market in Australia (WRONG)
Vanguard has not moved at the pace we expected. We still feel they will be a significant player and did not retreat from managing institutional money for the fun of it. We were delighted to see evidence of IFAs partnering with firms like Six Park and MapMyPlan in 2021.
Data will no longer be an acceptable moat around business models (PARTIALLY)
In 2021 we saw a significant uptake in off-platform managed account usage. Platforms are increasingly looking like data-aggregation services with custodial offerings. Investment Trends research indicated that data-feed accuracy (especially with SMAs) remains in the Top 3 areas for improvement for advice software. Who pays for these improvements (platform or software) is less clear?
Platforms wars will intensify, with distribution and technology ownership being the weapons of choice (RIGHT)
2021 M&A activity gave us clear evidence that platform business models are evolving with two trajectories. Firstly, building client engagement and advice delivery tools native to the platform. Netwealth’s investment in Xeppo and its proprietary client portal highlights this.
Secondly, diversifying the business model to expand the services provided to advisers. Hub24 was the most active in 2021 with their Easton and Class Super investments.
For many, it’s back to the future. Wealth02 quietly acquired ROAR software in late 2021. In an essential scale game, niche players will offer broader services to compete.
Netwealth to acquire Praemium by Q2 2022 (RIGHT)
Whilst this acquisition was rejected by Praemium, many suspect Netwealth will sharpen the pencil again. We believed this was a logical play due to Praemium’s technology leadership in virtual managed accounts. Netwealth, in their pitch to investors, highlighted this. We are chalking this one up regardless of whether a deal gets done.
Technology moves fast, but wealth management does not. If you follow our content, some of these will not be a shock to you, but we do feel in 2022, the rubber will hit the road in some key areas. It would be easy to make many predictions, like throwing darts at a board. We have kept it tight this year.
Digital Advice heats up
Asset Managers & Super Funds will invest significantly in digital advice. Why now? The reality of shrinking adviser numbers is starting to hit FUM projections. The unadvised have embraced online share trading and crypto at unpredicted levels. To attract and retain unadvised investors, some form of digital advice offering will be needed.
We expect most will build (foolishly), some will partner, and a few will buy. Pinnacle Investment Management took a stake in OpenInvest late last year. We expect to see the same for Six Park, Stockspot and MapMyPlan in 2022. At least two of these will be acquired or take on significant external investment.
The big winners from technology partnerships will be InvestCloud and Ignition Advice.
Land of the Giants
Intense competition between the major cloud providers targeting wealth management will intensify. Amazon, Google and Microsoft all have significant interest in our sector. Each has a strong partner entrenched in this market—Amazon with IRESS, Google with Hub24 and Microsoft with…well everyone.
Microsoft is the one to watch here. Their presence on all our desktops is ubiquitous, with 95% of advice firms using Office 365. Expect to see strong growth in Microsoft ISV’s (Independent Software Vendors) rolling out new productivity tools purpose-built for wealth.
Too much advice tech
With a shrinking addressable market of ~13,000 advisers providing holistic financial advice, we expect to see a consolidation of those providing custom CRM solutions to the industry. It is difficult to see how these firms can ride through this trough in our industry without very patient backing. ROAR Software merged with Wealth O2 in late 2021. We expect to see similar activity around Advice Intelligence, Plutosoft and Worksorted.
Bravura will change its strategy for MidWinter with less focus on the IFA market moving forward.
Expect to see consolidation/mergers between the plethora of advice tech solutions that do digital fact-finding. There are too many of them.
The Dataverse is the unlock
Microsoft coined the term Dataverse to explain that businesses should be able to do anything providing they securely manage and store data in the cloud. Our industry has an appalling track record of managing data. Expect to see significant efforts by licensees and large advice firms to rebuild their data structures. This will benefit advisers and arguably reduce the need for tech complexity.
Data specialists such as Umlaut and Xeppo should be winners from this; expect to see new entrants into our market who have significant expertise in other verticals, likely from the Microsoft & Google Partner ecosystem.
We hope 2022 is a happier year for us all. We have much to be grateful for and optimistic about.
10 August, 2021
PODCAST EPISODE Podcast: What the Quality of Advice Review means for Advice and Technology 11 April, 2022 Selin and Conrad are two leading compliance specialists who advise some of the wealth industry’s leading businesses on regulatory and business model transformation. We talk about the regulation of financial services and the ever-changing role of technology. With […]
PODCAST EPISODE Podcast: Mel Drago – Founder of Paraplanning Marketplace, Tanngo. 2 March, 2022 Mel Drago is the founder of the world’s first online paraplanning marketplace, Tanngo. Connecting freelance paraplanners with their financial adviser clients. She is an entrepreneur with a clear vision of how to improve the delivery of services to the marketplace. We […]
PODCAST EPISODE Podcast: 2022 Advice Tech Predictions 17 February, 2022 Nicole Smith, Aron Satchell and Peter Worn from Finura Group discuss the 2022 Advice Tech predictions for Australia. The team also go through the 2021 wins/fails predictions and some lively debate on the more controversial themes as we see market forces reshaping fintech in the […]
We’re focused on helping our clients achieve advice excellence and deliver leading edge solutions. Advice Tech predictions for 2022 Peter Worn, Joint-Managing Director at Finura Group It’s a new year, and the Finura team enjoys thinking about what the next 12 months ahead will hold for advice technology. We resist the urge to comment on […]
We’re focused on helping our clients achieve advice excellence and deliver leading edge solutions. Do we really need more advice tech? Peter Worn, Joint-Managing Director at Finura Group Despite the dominant role that IRESS has played in the advice tech ecosystem for over a decade, advisers, licensees & IFAs are forever bombarded by a growing […]
We’re focused on helping our clients achieve advice excellence and deliver leading edge solutions. Finura launches to the Australian market Following the departure from Enzumo, Peter Worn and Aron Satchell have announced an expansion of Finura Group’s reach into technology consulting and launched an independent wealth technology advisory arm. They said the goal was to […]
Ready to find out how we can help?
Get in touch with our team to organise a time to talk.